I don’t often respond to other bloggers but today I was asked to do so by my friend Dr. Steven Berglas who blogs for Forbes and is quite an expert on executive and entrepreneur psychology. Steve wrote recently about President Obama’s call for shared sacrifice in the current budget fistfight with Congress, claiming this was exactly the wrong message for the President to send to American entrepreneurs, effectively discouraging entrepreneurism. He asked a number of bloggers including me to comment for a follow-up post. My response (Steve’s wrong) ran so long I figured — what the heck — I might as well make a couple bucks from it. So here goes:

Dear Steve,

I don’t think either you or President Obama will like what I write here so you may not choose to use it.

President Obama has a message problem, true. He’s simply out of his depth.

Here’s a guy who has always been the smartest in the room, noted for his Teflon smoothness and turn of phrase. But in order to turn the right phrase, no matter how smart you are, still requires an understanding of context — an understanding he simply doesn’t have. And why should he? Obama was always a political operative. Michelle has more real world experience.

He’s not dumb, he’s not shallow, but he is inexperienced.

Shared sacrifice (and calling for it) works when you have no easier choices, when the alternative isn’t just a different policy but military defeat and potential annihilation. That’s why Churchill could make so well those very calls that Obama is frankly attempting to emulate now. Only this isn’t the Blitz — it’s the Great Recession — and the GOP isn’t Hitler, just a bunch of pols. So this was a misstep on Obama’s part.

But you are wrong, too. You know a lot of entrepreneurs, but I’m not sure you have ever been an entrepreneur. I have. I started and helped to start several companies that failed completely. I also helped to start three companies that have a combined market cap this afternoon of more than $500 billion.

One question I am frequently asked because of my background is if this is a good time to be an entrepreneur — a good time to start a company? Understand people have been asking me this question for 30 years — a period of time that encompasses some major booms as well as two of our deepest recessions. And the funny thing is that my answer to this question never changes: it is always a great time to be an entrepreneur and start a business. And with the passage of time I tend to think it has only gotten better, even today.

The sort of entrepreneurism I know, which is technology entrepreneurism, is acyclical. It doesn’t matter what the economy is doing, what interest rates are, even the mood of the venture capitalists. People will still start new technology companies to develop their great ideas. Understand that they do so with a 95 percent chance of failure, again no matter how the economy is doing. Against an obstacle that huge, factors like government policies and political talking points are inconsequential.

Entrepreneurs start companies compulsively. It would take medication to force them to stop, thank God.

So what we have here with President Obama and Congress is at best positioning and at worst posturing and it will have no impact whatsoever on entrepreneurial energy in this country.

138 Comments

Everyone knows the market from the consumer point of view but very few understand the other side. All we see are the 5% of successes and forget the other 95% of failures.

Still, even if government policy led to a 96% failure rate, that means the entrepreneur is comparatively 20% less likely to be successful. The energy might be there but we will have lost so many opportunities thanks to bad policy.

Piano Wire
July 14, 2011 at 4:28 am

For years now when anyone said the name Rupert Murdoch my brain has conjured up an image of a lamppost and a reel of stout piano wire. After reading this “inspiring” article, I now realise I have been wrong. I shouldn’t single out Murdoch, but conjure these images for entrepreneurs in general; people with no social conscience whose behaviour is independent of the the state of the society they find themselves in.

Glenn M
July 14, 2011 at 6:18 am

No conscience? Maybe I am reading this wrong (the coffee has yet to take effect this morning) but I know many entrepreneurs who feel morally driven to do what they do. They have this great idea in their head that they believe can change the world and change their lives. Many see it as being proactive rather than sitting in some boring but safe desk job doing nothing more than watching time pass until retirement.

I think what Mr. Cringley is saying is that entrepreneurs are doers, and they will always do, despite the odds.

No conscience? Are entrepreneurs bad? Is capitalism bad? Free markets? I’m not sure where you were going with your comment (personally I’d like to know from where you came to make that statement)

Some businesspeople are good and some are bad, as individuals dealing with others and as people doing work. That’s how it is for the entire human race. Entrepreneurs are driven to start companies to do things differently, their way, or to do something no one has ever thought of before. In my book, that’s all good.

(One side note, I can’t remember a post by Robert that has generated so many comments so quickly – must be the political nature of this one… shows how divisive the “situation” really is.)

Mr Windows
July 13, 2011 at 11:13 am

Amen, brother.
President Obama is seemingly clueless about many things, but business and commerce and how to encourage it is at or near the top of the list.
Here’s an idea: most people don’t understand that corporations don’t actually pay any income tax; they simply pass it along to their customers in the form of higher prices. Why not eliminate the corporate income tax and institute a national sales tax instead? Consumers would most likely enjoy lower prices, even with the consumption tax. Corporations could concentrate on growing their business. Eventually, all income, excise, capital gains and inheritance taxes could be eliminated and replaced with a simple, fair consumption tax.

There is always a big debate about what is a “fair” tax scheme. Many people believe in a “soak the rich” tax scheme. Others believe that the poor should pay little or no taxes, or even receive welfare.

Besides which, no matter how much tax revenue the government takes in, Congress can always find a way to waste a good deal of it. In the current situation, they waste tax revenue on those special interests that bribe them with large campaign donations.

There are no easy answers to life’s problems. There are only compromises and sacrifices. And the question is always, who gets the short end of the stick?

Chad
July 23, 2011 at 8:35 pm

Here’s how you implement a “fair” tax:
Take the amount of money the government needs. Divide that by the number of people in the country. Send everyone their bill.

Anything else is just social engineering.

Freemon Sandlewould
July 13, 2011 at 4:39 pm

screw VAT taxes !

unless you want to be Brazil….which I happen to know alot about. You can not buy or sell diddly without issuing a “nota fiscal”…….

not free. not fun.

How about instituting true freedom. Now THAT would be an innovation….

Charlie
July 13, 2011 at 7:02 pm

GE’s effective tax rate is zero. In fact, they got money back. The US has among the lowest corporate tax rate in the world.

G.E.’s Strategies Let It Avoid Taxes Altogether
By DAVID KOCIENIEWSKI

General Electric, the nation’s largest corporation, had a very good year in 2010.

The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.

Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

Sales taxes are regressive. Regressive puts the burden on lower incomes. Most sales taxes try to ameliorate this by not taxing things like food and medicine. Still, it overburdens those that are least able to pay.

The argument for them has always been that those who have more money are simply going to pass the cost of progressive taxation onto those who purchase their goods and services. Thus, we can cut out the middleman and tax the consumer directly. But there is a problem with this.

In the interest of gestalt, any additional taxation on the lower end of the scale will bring pressure to raise wages for those individuals. Calls for increases of the minimum wage, strikes, talent moving out of low-paying service industries, the refusal to accept work at low pay. Things we are already seeing.

To compensate for this, the higher end seeks pools of labor that will work for lower pay. Foreign workers, illegal immigrants, outsourcing, movement of industries to countries where labor is plentiful and cheap. These things are used to maintain and enhance the incomes of those not willing to pay those who are forced to accept the tax burden incomes that are sustainable.

Now, what happens when those laborers and the countries they are in want more money themselves? With an increase in the economy of those places comes the need to improve the infrastructure. To accommodate the new industries and service sector, roads, bridges, power lines, internet access and more have to be built out, and for the increase in government size to handle all this. This itself provides needs for additional taxation in those countries as they begin to mature into modern economies.

At some point, a wall will be hit, and the availability of large pools of cheap labor will dry up. It is then that a great shift will happen and it may not be to the good. The question is, do we want that? Or would it be best if those making the most money just accept more taxation while at the same time cutting spending, saving ourselves from a potential risk down the road? I think it is best if Americans get its house in order now, and not be tempted to use things like regressive taxation to continue pushing things in the wrong direction.

huxley
July 13, 2011 at 11:22 am

Here’s a guy who has always been the smartest in the room…

This is the customary genuflection towards Obama’s intelligence, but I’ve never seen it supported. Sure, he’s a smart enough guy, but nothing special from what I can tell. What remarkable mental accomplishments are to his credit?

He has written two books about himself and his opinions, but nothing in his legal career even though he was president of Harvard Law Review. His administration’s policies are rehashed from FDR and the sixties and seventies. His presidency is not going well and his response is mostly to blame others.

Not surprisingly, this column is about something else Obama does not understand.

Where is the brilliance here?

Freemon Sandlewould
July 13, 2011 at 4:42 pm

Amen Huxley. Obama is a clueless ego maniacal jerk.

….and if he has nothing to do with it why are entrepreneurs NOT hiring? huh?

Tim K
July 13, 2011 at 7:21 pm

I would gladly give up any one of my body parts that I have two of if Obama was FDR. Unfortunately he is Hoover.

If he was FDR the Great Recession would be over by now. Until September of 2010 I was living in South Korea. They implemented a REAL stimulus program in early 2009: the equivalent of 25% of GNP over four years. They grew .02% in 2009, but for the first two quarters of 2010 they grew at 7%, and a year ago the press talked about the Great Recession of 2008 like it was ancient history of the one they had in 1997. That’s what a real FDR would have done.
(By the way, they have an excellent national health insurance system [that uses private insurance companies] that cost me $42 a month and my employer $42 a month.)

25% of GNP in 2009 would have been $4.5 to $5 trillion. $2.1 trillion was probably the minimum to be efficacious and anything below $1 trillion just wasn’t serious. Nearly half the stimulus went to tax cuts, the very vehicle that created the imbalance in supply relative to demand, Nearly half of the rest went to aid to state governments whose own revenues were collapsing. Nearly all the rest went to safety net programs like food stamps and unemployment insurance. What was left over for ‘stimulus’? About $33 billion. That’s about 5% of a stimulus that was only 15% of what it should have been to be efficacious.

Remember WWII got us out of the Great Depression. That represents $30 trillion of stimulus in today’s dollars. So yeah, Obama is Hoover. Hoover wasn’t bad. He was easily the most progressive Republican in his party, just as Obama is the most regressive Democrat in his party – but the scale of the solution was vastly larger than anything he was able to manifest.

There is an FDR out there. Hopefully. We have a demand defficient recession and everyone is still insisting on implementing supply side bias policies. Hello! We hit supply side saturation 12 years ago.

Hopefully there is an FDR out ther. Hopefully there is some one who will come along and look at the Great Recession, and notice the obvious, that “It’s the demand,stupid” (or lack there of) and implement demand side bias economic policies. Ask any businessman they’ll tell you they don’t need more tax cuts, they need more customers.

I’m sure Obama is smart about some things. Given the number of ambitious people out there, he had to out fox someone to become president. But I agree with Bob in that he doesn’t know entrepreneurialism, nor in a larger sense, commerce, nor in a larger sense still, economics. Bad to be in a Great Recession and have a president who doesn’t know beans about economics. After all, he has lots of people telling him he’s being too much like FDR and not enough like Herbert Hoover… And in a demand deficient recession no less, that’s insanity. Every minute we waste without the right policies means that tens of millions of lives activities are being wasted. Tens of millions of kids can’t get their careers started. Enormous waste … much bigger than the paltry sum spent on the “stimulus”.

Bill H
July 13, 2011 at 9:46 pm

No, Obama isn’t Hoover, the Tea Party enthusiasts are Hoover. Hoover tried to balance the US budget after the 1929 collapse, effecting a negative ‘stimulus’. I agree that the stimulus has not been near enough to offset the effect of the housing bubble, but I also don’t see how the government can afford to provide stimulus funds equivalent to the money created and then destroyed by the financial wizards. By the beginning of 2012 though, we will probably all be getting a real lesson in the finance of deflationaly spirals, without reading history books.

Tim Kane
July 14, 2011 at 6:41 am

It’s called higher taxes, on the rich. Take it to Reagan era tax rates. Take it to Nixon era tax rates. If necessary, Eisenhower era tax rates. This is an emergency. The problem isn’t government spending too much, it’s government spending too little. They don’t need to finance it.

One other thing… stimulus generally have only a short term effect on deficits. Real short term. The existence of large deficits is not a good reason to not do stimulus.

The long term deficit is largely a creation of Bush policies. There was a surplus before then. His deficits was all largely to shift our societies resources from the demand side to the supply side… welfare for the rich. It didn’t work on a number of levels. So if you are worried about the deficit, tax the rich. But worry about the deficit is no reason for doing a short term stimulus. And according to engineers in our society we need $2 trillion just to repair our infrastructure, not build something new. We could repair and build something new – like more light rail in cities and fast rail between cities. It doesn’t matter if it works… World War II cost $30 trillion in today’s money and most of those weapons had no direct return on our investment.

Joe Latrell
July 16, 2011 at 7:41 pm

Except freedom to actually enjoy the internet, Bob’s wonderful column and the rest of the American dream.

Mark
July 13, 2011 at 10:29 pm

This is good stuff. Thanks for this.

In terms of Obama not knowing enough about entrepreneurialism, though, I’d have to say that no serious candidate of the last 25 yrs has, either. One of the problems we will face with increasing regularity is an elected government (all three branches–don’t even pretend like the Supreme Court isn’t an elected body) that is fairly clueless about foundational economic realities. Technology is so little understood by members of Congress that it is both appalling and appallingly funny.

Tim w
July 14, 2011 at 9:07 am

Stimulus is more than just throwing money at a problem. Money that goes to directly creating jobs (building buildings, parks bridges or a new interstate highway systems) is much more effective that money to secondary areas such as banks.

John B
July 14, 2011 at 9:18 am

Great comments Tim! As you say, only $33 billion was left over for real “stimulus.” I once tried to say something like this here, but not nearly so well as you have. when I expressed frustration at Obama for his handling of the recessionary crisis. The trillion dollar stimulus he allowed did nothing to fix infrastructure or stimulate economic growth. So all that was really done was to bloat the size of our government and our national debt to crisis levels. It’s a pity.

YetAnotherBob
September 2, 2011 at 9:08 am

No, Obama isn’t like FDR. FDR took a three year recession and turned it into a near 20 year depression. Hoover on the other hand took the worst two years of that recession and had a real net improvement over the bottom by the time that FDR took over. Unemployment had peaked, and was going down when FDR took office. But, the New Deal soon put an end to that. Unemployment reached a high of close to 15% shortly after the Wall Street Crash of 1929, and by 1931 had dropped to a little over 10%,, but under FDR it rose to over 15% and STAYED there. Hoover’s real problem was that he didn’t veto the Smoot-Hawley tariff act that was the first shot fired in the global tariff and trade war which was the real cause of the great depression. Only World War 2 and the subsequent lowering of tariffs ended the Great Depression.

Obama has repeated this mistake, like both George W Bush and Herbert Hoover, he failed to reign in the disastrous Reid-Peolsi congress’s overspending. He has thus allowed teh US in only three years to grow the total national debt by more than 40%.

Bush gets lambasted by Democrats for allowing the debt to grow by over 25% over eight years. but Obama has now had 1/3 of the total debt run up on his watch.

Debt is a problem because it displaces money that could otherwise be used for Capitalism IE for increasing the total amount of real wealth. Whatever your take on the distribution of wealth, if there isn’t any wealth, then there isn’t any to pass around.

Deficit spending is also responsible for inflation. Which is now close to 15%, as any person who buys groceries knows. Government claims that it is much lower are false. These falsehoods have been perpetuated by the government every time there is an economic crisis for at least 100 years. Bush did it, Carter did it, Ford did it, Johnson did it, Trueman did it, FDR did it, and so on.

The government’s fixation with supply side and Demand Side economics ignores and overstates the extent of the problems. The truth is that the Government doesn’t have much real power over the total economy, and what power it does have isn’t used very well. Government is mostly just able to break (slow) the economy, but seldom wants to do that.

No, I don’t know what Obama could do to quickly ‘fix’ everything, but Bob’s ideas come much closer than anything the Supply side (Republicans) or the Demand side (Democrats) are proposing.

Oh, and one more thing that Obama doesn’t get. Most jobs don’t come directly from entrepreneurs. Small companies need to grow before they can hire more than a few people. It’s not this years entrepreneurs that give us the jobs, it’s two years ago’s entrepreneurs, who are now growing into mid sized companies.

But that’s a whole ‘nother column.

Matt
July 13, 2011 at 11:27 am

Great post Bob! Thanks for pointing out how little Congress and the President actually affect the entrepreneur. I think it can be extended to the population as a whole. A thing to to think about is that even if unemployment is at 10%, 90% of the working population is still employed, presumably at or above the same level they were employed 3 years ago, before the housing bubble popped.

Knowing that I might be able to sell my house at the same price I bought it for in 2004, even though I’ve pored another 10% in as improvements sucks. It even limits my mobility to a degree. But I can keep making my payments. My cousin lived in Phoenix, he and his wife decided to walk away from their house, even though they could still make the payments. He’s in the television media industry, and you know in this economy. So, “in this economy” it was the right thing to do. Even though their credit is now ruined, and they lost as much or more than trying to sell the house at rock-bottom prices.

But that’s just it. If you’re part of the 90%, the economy isn’t affecting you any differently than before 2008, before the Obama administration, before the 112th congress. But “in this recession” everyone is acting like it’s the end of the world and they’re scared. Or at least, to pull the popular line, you have to blame the recession (or Obama, the Republicans, or Congress) on why you aren’t happy, and aren’t enjoying the life, liberty and pursuit of happiness available to you.

Seems like it’s just time to suck it up, and take charge for yourself, create, make, build, and enjoy with what ever you got.

Tim K
July 13, 2011 at 7:45 pm

Well 90% are in employed, but of that 90%, 10% is under employed. I was designing manufacturing systems a decade ago. Now I work in a call center for 50 cents above minimum wage, part time. I get my health care from charitable foundation. The economy is a disaster.

Also, you can’t compare places like Phoenix and Las Vegas or Florida, to say, Kansas City or Columbus Ohio. The drop in home prices was monstrous out there. A person can’t make a $4000 a month payment on a house that’s worth a fourth of what it was when they bought it. From what I am told by relatives the laws in Arizona also encourage people walking away from a house, that you are upside down on and from how it was described to me, the banks don’t seem to mind, but it creates a cascading effect. My mother is a retired real estate agent living out there. She says housing prices will not come back inside of 15 years, and might take 25 years – which is to say they’ll never come back. Because of the unique situation you have there you have massive amounts of people walking away from their houses. I’m not sure that’s going to destroy there credit for forever. This is the Great Recession.

In fact this recession compares to the the one in the 1930s. In 1933, GNP was still at 63% of the 1929 total. For most of the naughties, the demand for cars in the U.S. was around 17 million. In 2009 it was less than 10 million. Those are Great Depression numbers. Also the way they kept the numbers then was different. In the 1930s if you worked for the government you were counted as unemployed. Today if you have a master’s degree and take tickets at the movie theater or been unemployed longer than two years, you don’t count.

The recession in 1929 was the result of concentration of wealth, which lead (as it always does) to investment bubble, which lead (as it always does) to a melt down. Until policies reversed the concentration of wealth, the Great Depression stayed in place. That’s from October 1929 until December 1941. That’s how long it took to get real demand side bias policies. And it took the Japanese bombing Pearl Harbor to do it. As Churchill said: “”Americans always do the right thing, after having tried everything else first.

The current recession is exactly to same: concentration of wealth, investment bubbles, meltdown, long term collapse in demand. There’s only one way out: demand side bias policies. Of course we’ll try everything else first.

By the way, Japan implemented strong deficit spending based stimulus program as early as 1932. By 1939 their industrial production had doubled, and had shifted from centered in textiles to centered in heavy industry. That strength gave the Japanese the sense that they could hold their own against a still anemic U.S. in the Pacific. When we finally implemented our own deficit based stimulus for arms production – unfortunately for Japan, our economy’s GNP doubled too. The rest, as they say, is history.

Nortcele
July 13, 2011 at 11:44 am

To preface, I’ve been known to vote predominantly Republican; and from my perspective, Obama is succeeding in deflecting the budget mess onto the majority party. The general populace is disgusted with large corporation (banks,oil,etc) shenanigans that predominantly have been allowed/encouraged/ignored by the Republican party. I’d like to bury Goldman Sachs (is there an app for that?). Republicans are attempting to embrace the Tea Party “No more Taxes” line, but it rings hollow because of their defense of obscene tax loopholes used by wealthy individuals and corporations. I don’t think Obama is taking any water on with his current stance. And I agree it has no real impact on entrepreneurs in general. Someone has to draw a line in the sand and stop this California style fiscal carelessness, and I’ll back which ever politician does that.

The wealthy in this country are paying the lowest effective tax rate in the past 60 years. The Fortune 400, according to the IRS were taxed at 17% last year. This is why we have a budget deficit. The past decade of cuts has not only failed to produce jobs, it helped create the Great Recession.

“The Republicans, who control the House and now have greater control of the Senate, have now decided — having tripled the debt in the 12 years before I took office and doubled it since I left — that it’s all of a sudden the biggest problem in the world”
–Bill Clinton

Montgomery
July 13, 2011 at 4:38 pm

They are paying the lowest effective tax rate in 60 years because they are making less money than they’ve made in 60 years. Meanwhile financial institutions and businesses are sitting on record amounts of cash.

Why? Uncertainty. Businesses won’t start hiring people, growing, and taking risks when they think their tax rates are going to go up, when they don’t know how Obamacare is going to impact them, when reliable sources of energy are under assault, and while they are being buried under mountains of new regulations.

It is not enough to hold interest rates down or throw money at banks. Government can and must create a predictable and safe environment tax and regulatory environment. The economy will not recover so long as the Crusader in Chief continues to play class politics and strangle the goose that lays the golden eggs.

Obama better figure this out in a hurry or he’s going to join the millions of unemployed he’s been unable to help.

Tim K
July 13, 2011 at 8:12 pm

I take it you watch a lot of Fox News &/ listen to Rush & his conferates.

Ask any small business person. They will tell you. They don’t need lower taxes. They need more customers.

They used to say “It’s the economy, stupid.” Today “it’s the demand, stupid”.

We had 30 years of supply side policies. That lead to concentration of wealth on the supply side. Bush’s tax policies alone moved $5 trillion from the demand side to the supply side of our economy.

Supply-side is euphemism for rich. Rich are people who don’t have to work for a living, because their investment money does that for them. The greatest disaster for a rich person is to fall out of that classification. As a result ROI (return on investment) for them is EVERYTHING. Uncle Ronnie was right, its the job of the rich to invest in socially constructive enterprises that create jobs for the rest of us.

Well the first thing they do is push for deregulation so they can get at the unorthodox investing they’ve been roped off from because it’s not constructive: things like payday loans, second and third mortgages, derivatives and subprime loans for example. Because investors are rich, powerful and persistent the government eventually resents.

In the mean time, they are still trying to find orthodox investments that offer good returns… but because there’s no demand, they can’t find any. When some sector of the economy does pop up that offers good returns, say a new technology which brings with it its own latent demand to generate good returns, investors swamp that sector… creating an investment bubble.

This is all a result of too much supply side economic policies. Economics is dominated by supply and demand. When you have too much demand you get inflationary recessions – that can justify supply side bias policies… but only on a limited basis because in a market oriented economy, supply accounts for only a third of the economy. We’ve had 30 years and counting of supply side bias policies. They quit being efficacious by 1999. Remember the dot com bubble?

When you have over zealous deregulation (repeal of glass steagall), and over investment bubbles and deflationary pressure on prices you are well past the saturation point of supply side economics. The economy just can’t absorb any more supply side policies. In that sense, Obama’s agreement to extend the Bush tax cuts was a complete and utter disaster.

You know, there’s nothing more basic than the law of supply and demand. If people don’t get that, then they don’t understand anything about economics. We won’t get out of this depression until people finally understand these simple concepts. Sigh. But I suppose that’s what watching Fox and the like does to people.

matt
July 13, 2011 at 9:44 pm

interesting and thought provoking Tim K., thanks for sharing.

In this sentence, “Because investors are rich, powerful and persistent the government eventually resents.”, I believe you actually meant “…eventually relents.” — though I’d not be surprised if there were some resentment to relenting…. 😉

Tim Kane
July 14, 2011 at 6:46 am

Yeah, when I type fast, I make a lot of mistakes. Most embarrassing is the use of homonyms (we one) and I can mispel them too.

Montgomery
July 14, 2011 at 5:06 am

No… no Rush or Fox news, thank you very much.

Anyway, I said nothing about tax cuts. Nor did I say anything about deregulation. Or supply-side economics. My point is that investors and banks crave stability. Big Money players aren’t going to participate in the free market when they think the rules are going to change in the middle of the game.

If BHO want’s to help the economy, he has to stop talking up higher taxes and turn a wet hose on the orgy of new regulations being pumped out of federal bureaucracies.

Contrary to you populist/Marxist rant, there is no historical precedence of an economy being pulled out of a recession by the government throwing a few pennies at consumers to stimulate them to buy. It didn’t work for FDR – his “recovery” dragged on for a decade – and it’s not working now. Consumers consume when they have jobs.

Tim Kane
July 14, 2011 at 7:12 am

I’m not a populist, I am a democrat with a small “d”.

I’m definitely not a Marxist. I believe in pragmatism with a bias towards justice/fairness and liberty/freedom, in that order. The ascent of Anglo-Saxon civics, from a small part of a small island off the northwest cost of Europe to the rest of the world is based upon this very concept of pragmatism. It sprang from English Common Law. Per Oliver Wendall Holmes, the Common Law applied narrow solutions to narrow questions, but here’s the important part – the decisions were made by judges who were free to choose from the market place of ideas. Thus, Anglo-Saxon, Common Law countries evolved into “patch-work” ideological constructs, with each ideology being applied, only where it made sense, and ignored (dormant) where it didn’t.

Over the centuries the decisions developed a bias towards fairness and liberty – not out of altruism, but because those decisions tend to be self enforcing,… meaning they didn’t place big demands upon the king’s purse to enforce (coercion is always expensive form of authority, perceived legitimacy or moral authority, is always inexpensive, relatively speaking).

It started with the Common Law but the pattern soon jumped to policy and politics in the 18th century. You can read about the pragmatism policies in “Bad Samaritans” by Cambridge Economist Ha-Choon Chang. The British were implementing industrial policy in the early 18th century. By the end of the century they were the richest nation in the world, what Napolean called “a nation of shop keepers.”

Pragmatism says, if it’s cold out side, I put my coat on. If it’s hot I take it off. If your ideology says leave the coat on, what do you do?

In that sense, like all meridians lead to the north poll, I believe ALL ideologies leave to the same ends – nihilism. Common sense and pragmatism, then is the only way to protect oneself from such an end. If it’s hot out, take your coat off, and live, and to the extent you can, enjoy life.

If you have too much supply, ie. supply side saturation, what do you do? You more supply side bias policies? I think not. You implement demand side policies. Not for ever, but until things are stabilized. If you have a deflationary recession, characterized by deregulation and investment bubbles, you’ve got too much supply and too little demand. It’s that simple. That’s not Marx. That’s Adam Smith.

Conversely, if you have too much demand, as we did in 1980, you implement supply side bias policies, as we did in 1980. Unfortunately we did it for 30 years. About 23 years longer than was prudent (see Savings and Loan crisis and Black Friday in 1987).

Republicans are ideologues. They see the world through an ideological framing device. Thus if you don’t have their exact same opinions, you must be and ideologue of a different mind. Thus, you think I’m Marxist. I’m not – I’m a pragmatist with a bias towards fairness and freedom, but only a bias.

Yes, I’m obviously different from you. But I’m not pushing a different ideology. I’m pushing an absence of ideology. Most troubling that you can’t see that… that you are stuck in an ideological framing of reality.

Montgomery
July 14, 2011 at 8:05 am

Whoa, my pragmatic friend, too much information. But within all of that, you failed to provide even one single example of an economy in recession that was lifted out of it through government “stimulus” programs that funnel [borrowed and taxed] money to consumers.

Entrepreneurship, investment, and business development (i.e. the topic of RXC’s article) are speculative endeavors. That means that people are hired and put to work long before a consumer demands the product. Of course, if the demand never materializes, the employees will be terminated. But the impetus for widespread new hiring occurs when investors put their capital at risk and hire people today in anticipation that they will make profits weeks, months, or years down the road. More people hired means the market for products (i.e. demand) increases and the overall economy is lifted.

This is true of everything from farming, where farmers and field hands are hired months before a consumer has a Big Mac attach, to technology companies. For instance, Apple employed engineers and, eventually, a small army of folks in manufacturing and assembly plants (albeit on the other side of the globe) long before anyone in America knew they wanted an iPad.

If Apple lacked the confidence that they could make money because of some ludicrous raft of new regulations hanging over their heads and they thought their product’s margin was too narrow to absorb tax increases, they might have sat on their money like nearly every other potential investor/entrepreneur in the country is doing right now. And all those employees would be looking for an unemployment check.

Jason
July 14, 2011 at 8:38 am

No. Businesses will spend that money when there’s demand. Do you really think businesses will sit around fretting about regulations when there’s actually more demand for their products, more money to be made? This “predictability” argument is just more supply-side BS.

Jason Osgood
July 14, 2011 at 1:40 pm

Monty wrote:

“…you failed to provide even one single example of an economy in recession that was lifted out of it through government “stimulus” programs that funnel [borrowed and taxed] money to consumers.”

I’m curious. If history and objective reality aren’t sufficient, what will you accept as evidence?

Tim
July 14, 2011 at 2:26 pm

Examples of deficit generated spending that pulled a nation out of recession/depression:

In the case of Japan, the spending went to armaments. The Minister of Finance attempted to end the program in 1934, but was assassinated by military nationalist. From that point on the military called the shots: more weapons, more deficit spending. By 1939 the industrial production had doubled over 1929 and shifted from light industry and textiles to heavy industry. They attempted to implement controls to limit inflation, but it never really worked. The vitality of their industry contributed to a belief that they could hold their own in a war in the pacific against a still anemic U.S. But then after Pearl Harbor we did our own stimulus and increased our GNP 100% and suddenly they were totally out matched.

Those are examples that come to mind. Incidently, we rode to Europe’s rescue in WWII. But we bare some guilt. Our lopsided economic policies created the Great Depression which then triggered the rise of Hitler, the nazis, WWII and the holocaust. Coming to their rescue was the least we could do. One wonders what monster the Bush/Obama policies are giving birth to.

Ross
July 13, 2011 at 12:22 pm

A few years ago I attended a talk by the CEO of iRobot, maker of the Roomba robotic floor cleaner. One of the slides in his presentation was a list of 19 failed products the company had tried before hitting on the Roomba, a terrific example of the 95% failure rule.

An important lesson I’ve learned as an entrepreneur is the ability to decide when the product or service you are offering isn’t working, and to move on to something else. I think some politicians could benefit from this lesson.

Robert Squitieri
July 13, 2011 at 12:34 pm

The Problem is not when to start a business. The answer is now is good. The problem is when do I hire employee number two.

At the present time I have no way to predict the cost of employee number two. Guess what. There is no employee number two. My local school board has the same problem. So they lay off teachers. We live in the “good school district” for now.

The real world shows that 20 percent of the people out there are not going to get a job anytime soon.

I see no fix to this anytime soon.

As far as the pols go, arguing over 2 or 4 trillion dollars over ten years is pure BS when you blow an extra 1.5 trillion dollars a year.

I am still waiting for the pols from either side to say to me I get what I have now and I will get it to you for 10 percent less.

But look at the bright side in ten years the dollar will be so low we will be low cost producer of everything. Any business should succeed then and China will really be upset.

Matt
July 13, 2011 at 12:53 pm

The facts are very, very clear:
The wealthy are job creators. They must not be taxed as they were under Clinton, when the job creators created 23 million new jobs. They must be taxed as they were under Bush, when they created almost none at all.

cark
July 13, 2011 at 1:20 pm

Matt-
You are ignoring half the fact in your misleading reply. The fact of the matter is that the economy was humming along based largely on the false confidence of the Dotcom/Tech bubble. Higher taxes are more palatable when everyone is making money and the future looks bright. Also Clinton had a (R) congress that didn’t allow him to do alot of the dumb stuff he wanted. By the end of Clintons term the boom turned to bust just in time to hand a recession and 9/11 off to his predecessor. Timing is everything.

Euro2cent
July 13, 2011 at 7:07 pm

> hand … off to his predecessor.

Neat trick, most mortals have to make do with their successors 😉

cark
July 14, 2011 at 6:54 am

oops

Euro2cent
July 14, 2011 at 10:06 am

Overall it was quite a good point, apologies for picking on that slip.

Tim K
July 13, 2011 at 8:21 pm

Where is there a long list of countries that countries with low taxes and high prosperity?

Small government?

All republicans have are half baked theories with NO real world examples.

Face it, Bush created ZERO jobs. That’s hard to do. If his policies were efficacious at any level, you think he might have created some, like maybe one or two, or something like that.

The policies of the Bush administration created almost the exact same conditions as the late 1920s with almost the exact same result.

That’s a simple fact. If you can’t see that, then you are being willfully ignorant.

cark
July 14, 2011 at 6:57 am

We WERE the best example. Unfortunately people don’t learn from the mistakes that the European Socialists have made and instead are trying to emulate them. Sad 🙁

Tim Kane
July 14, 2011 at 7:14 am

Hmmm, I don’t see European socialist states in the news these days. Sweden, Norway, Denmark, Germany, Holland, France, how are these guys getting along these days? Last I heard, the Danish people were the happiest in the world.

Pity those poor bastards.

Matt
July 15, 2011 at 7:38 am

It is too bad that the European socialist countries are doing so poorly. Span, Italy, Greece, and Ireland are all in dire trouble, seeing loans from their neighbors just to keep the lights on. Meanwhile Finland is struggling, with it’s economy dominated by a single producer Nokia, who has been hard hit by the smart phone revolution. France and Great Brittan are implementing new austerity measures, meanwhile, Germany wants to drop the bunch, moaning that it should have kept it’s Marks.

It’s all about self determination. If you choose to blame Clinton, Bush or Obama; if you choose to blame the dot-com bubble, the commodity bubble, the real estate bubble; if you blame the Republicans or Democrats, you’ve forgotten who really to blame.

John
July 13, 2011 at 1:28 pm

I think we are confusing entrepreneurship with management and leadership skills. Often entrepreneurs are not good managers or leaders. Conversely good managers don’t necessarily make good entrepreneurs. Different skill sets are needed!

Bottom line, our government can’t escape the laws of mathematics. This is not something they can ignore or legislate away. The solution to the problem has been known for as long as there have been businesses and accounting. The budget must be cut. Revenue must be increased.

Good leaders have a balance of strategic and tactical skills. Unlike our government, they usually don’t wait until the last minute. They fix the problem before it becomes a horrible crisis.

True, it’s the rare entrepreneur who is also a natural manager, but then managers are typically using other people’s money. Where we started with this, though, was with Steve Berglas using the word ENTREPRENEUR. These are like salmon and while droughts and floods have some effect, a few always seem to make it through to spawn. That was my ONLY point.

BUT, just read ahead a bit. Entrepreneurs are the ones manipulating other people’s money. The creative folks, the ones with the Big Brains, aren’t entrepreneurs (necessarily for being creative; they could also be other behaviour). This was understood not only by professional economists, but also civilians. Until the Right Wingnuts figured they could use the word to flummox folks into buying the Supply Side Kool Aid.

This is an accurate (from the point of view of a trained economist) description. Note that the VC is closer to what the word means, not the startup builder. Entrepreneurs are only interested in $$$, not progress.

Tim K
July 13, 2011 at 8:39 pm

I have what I call “the beagle and the dog sled theory” of humanity. I got it in part from managing projects. But in part from my aunt telling me, 25 years ago while I was in college about sled dogs in Alaska. They love to run, they love to pull the sled, they love the cold and if their owners didn’t stop them they’d would probably run until their hearts gave out. Until then, I thought the sled drivers were being cruel to the dogs.

Then later I had a friend who got a beagle when he got married. The beagle would lumber around the house, like he could barely walk. He was real good at falling on your lap while you sat on the couch – which I always liked. Then one day while barbequing in his very crowded, cluttered back yard, I happen to be there when a rabbit stumbled into the back yard. The beagle and the rabbit saw each other at the same time. The beagle suddenly became a creature completely apart from the lap dog. The rabbit immediately turned around and ran away. The beagle didn’t bother chasing it… he had already done the calculations and realizing all the clutter in the back yard, realized where the rabbit’s persuit would take him… and so the beagle instead of charging straight ahead, broke to his right…. cutting off the rabbit at where he knew he’d end up. Sure enough the rabbit soon found he was running right into the beagle…. and had to suddenly stop right in its track and reverse itself again finally squeezing out of the yard where the fence came up against the house.

The moral of the story is that beagles live to chase rabbits. When there are no rabbits to chase, beagles don’t take up another task, instead they dream about chasing rabbits in their sleep. Sled dogs live to pull sleds. People are the same way. When you manage a project, you don’t want to assign sled dogs to chase rabbits and beagles to pull sleds. Fortunately if you let them, people will volunteer to do what they are cut out to do. That’s management in a nut shell: letting beagles chase rabbits and sled dogs pull sleds.

Bob is saying the same thing of course. Entrepreneurs are going to be entrepreneurs no matter what the context. You couldn’t stop them from doing what they are cut out to do any more than you can stop a beagle from chasing rabbits. That’s how all humans are. Imagine what it was like a hundred years ago when the natural born programmer couldn’t program for a living.

Our economy is a market economy. It’s based upon demand. Unfortunately humanity is based upon supply. We are each supplied with our given set of aptitudes whether they are in demand by the economy or not.

Montgomery
July 13, 2011 at 2:49 pm

“… he is inexperienced.” Yes!

When the American people, in their wisdom, elected the man, he had zero executive experience, zero foreign policy experience, and zero military experience – all constitutional responsibilities of his office – and precious little legislative experience.

Furthermore, there was nothing in his background that indicated that he knows the first thing about managing an economy (a perceived power of the presidency), let alone fix one.

So it is only a surprise to the people who deluded themselves into believing that he was “the smartest man in the room” that he has been an clumsy failure in all of these respects.

Tim K
July 13, 2011 at 8:49 pm

And when the American people in their wisdom elected Bush they elected a man who spent 40 years as a vindictive, bitter drunk, who had ruined nearly everything he had set his hand to, and had only 6 years as governor in a system where the governor has about as much power as the queen of England.

What did he do… he did what he always did… he ran the nation into the ground. He took a nation that was not only near its height, but at the height of any nation at any time in history… and simply ran it into the ground in eight years. By the time he left the economy was crashing losing hundreds of thousands of jobs a month.

This was the essence of Bush’s entire life. He always failed upwards.

We won’t know whether or not the nation has survived Bush until about 50 or 75 years after he’s been gone.

I don’t like Obama. But he’s a far cry better than Bush. Bush couldn’t pore water out of boot if the instructions were written on the heal.

Montgomery
July 14, 2011 at 4:38 am

I hate to break it to you, but George W. Bush isn’t president. He hasn’t been for a few years now. This half-assed “recovery” we’re mired in right now belongs to the economic neophyte currently in the White House.

How’s that working out for everybody?

Tim Kane
July 14, 2011 at 7:19 am

Yeah, he owns the recovery, but he doesn’t own driving the country into the ditch.

And it’s not the entire country. There was a time there at the end of 2008 and the beginning of 2009 where the entire world economy was on the brink. This was the handy work of Bush.

We and the world are not out of the woods yet. To the extent that the recovery is half assed is the extent to which Bush policies have been continued. Most specifically, the tax cuts.

Like I said, we and the world won’t know whether we have survived him until 50 years hence. And we won’t have survived him until we quit hanging on to his supply side bias economic suicide that he used to drive us into the ground. To the extent Obama is a failure is the extent to which he has continued Bush policies and avoided demand side bias remedies.

Montgomery
July 14, 2011 at 8:26 am

If you think GWB drove the economy into the ditch, then you’ve been listening to too much of OBL’s baseless rhetoric. What policy unique to GWB caused the recession? There isn’t one. The collapse of the housing market bubble is the accumulation of 40+ years of federal policies – Democratic and Republican – that were designed to make housing more affordable; by politicians buying votes by promising to deliver the American Dream to underprivileged and underserved communities. FYI, Obama’s law firm was up to its eyeballs in suing banks that resisted complying with these suicidal government-imposed lending policies.

Banks were forced to make loans they new couldn’t be paid back, so they did the only thing they could do: spreading the risk by securitizing the toxic assets through Fannie and Freddie. When Fannie and Freddie’s financial condition was called into question by Bush’s secretary of the treasury, it was Barney Frank and Chris Dodd who swept the issue back under the rug, telling the world that Fannie and Freddie were just fine. Bush should have forced the issue at that time and possibly preempted some of the pain, but it would have been nearly as bad anyway.

Tim
July 14, 2011 at 2:41 pm

Back of the napkin analysis, admitted: Bush’s tax cuts moved $5 trillion alone from the demand side of the economy to the supplys side. Other policies and actions had the same effect: poor regulation of tax abuse, poor regulation of industry, raising the H1B visas quotas put lots of tech workers over 45 on unemployment and put down word pressure on wages across the industry. Then there was the Medicare Drug program giving drug corporations $500 billion, and there was the invasion of iraq, a cost of up to $3 trillion, with no bid contractors… remember the $10 billion they simply just lost? Some analysis I saw put’s the transfer of resources from the demand side to the supply side at $14 trillion. But we know it was at least $5 trillion from tax cuts alone. and we can be fairly certain that it was at least $7 trillion. In the first four years of his administration alone, the top .01% income went up 500% while the median wage for the average family went down 5%.

Now, you can’t take $7 trillion dollars from an already depleated demand side of the economy and transfer it over to an already saturated supply side of the economy and not expect bubbles, risky if not fraudulent financial practices, and eventual collapse in demand when the cheap money that was coming from China was all used up.

That’s what Bush did. He inhereted an obviously supply side saturated economy in 2001: there was the dot come investment bubble, there was the deflationary recession, there was the repeal of financial regulations… those are all definite indicators of supply side saturation. What did he do? He pored the coals on supply side bias economic policies, borrowed cheap money to cover his tracks, and then hoped that the slack wouldn’t run out until he was out of office. Oops he was only about 4 months off that.

An objective and remedial understanding of economics suggest that he went in exactly the wrong direction and got exactly the expected results. No one knew the timing though. Now the reason there was so much debt is because you had the median family who had lost 5% of their income attempting to maintain their lifestyle until they could bridge to the other shore… but the bridge was too short and the rest is history.

In case you didn’t notice at the time: your beloved Right Wingnuts gutted the plan from the start and making its effectiveness minimal, all to discredit the black guy, even if it means destroying the economy. They have said so. If you like fascism, you’ll love Bachman, Palin, and the rest. I hope you’re a rich white dude, otherwise you’ll be up a creek without a paddle.

Dan Kurt
July 13, 2011 at 2:53 pm

re: Obama is the smartest guy in the room

Depends on the room. I can not believe it was true at Harvard Law or Columbia. I spent nearly nine years of my youth at one of the IVYs and during those years very few of us covered our “resumes” under a bushel basket as has Obama. We, non legacies, all ( ok, nearly all ) overtly or through hints broadcast our SATs, GREs, Honors, accomplishments etc to anyone who would listen.

That Obama has not released any of his records from Columbia and Harvard let alone his SAT and LSAT scores tells one that it is unlikely he performed well. More likely he simply was an affirmative action smooth talker slid through the system because of who he was not because he was brilliant.

This is not to say that the most brilliant have the top grades. During my schooling I met some really, really smart students. One now has a Nobel prize and he was both smart and a hard worker. Another, I recall, was while in college an A-, B+ student but he rarely studied as he chased skirts and read novels constantly. When he took the GREs he scored 800 verbal, 800 math and a 960 out of 970 in his field exam which I think was Chemistry. With both of those students everyone around them knew that they were super smart and both of them managed to let their credentials be known. I found that in the IVYs those that had it almost always flaunted it. I doubt the Obama actually has much upstairs given his keeping his records secret.

Dan Kurt

Larz
July 13, 2011 at 2:57 pm

Hey Cark, lets here your defense of eight years of W’s administration and the GOP cutting taxes by 1.6 trillion and then prosecuting two wars and the mess they made of the country and then handed to Obama. Remember timing is everything.

Joe Johnson
July 13, 2011 at 3:07 pm

I have not succeeded (yet) at the start up game, but I have given it a few tries and I can assure you that outside economic forces like interest rates, employment rates, and, least of all, VC moods, etc. have essentially zero influence in the decisions start ups folks make.

Our optimism that we will succeed and the potential payout so attractive that these other factors are just non-issues.

Now if you could figure out a way to get our wife’s to calm down… …THAT would be an enabler.

My 2 cents.

Joe J.

P.S. Nice post Bob.

brycef
July 13, 2011 at 3:25 pm

Seems that politics intrudes more and more in the course of economic discussions these days…which means most economics is now politics and politics is economics…whatever.

What is important is that the next week or two will determine whether we skate through another “raise the deficit ceiling” legislation and kick the can down the road or whether we truly tackle this problem now. Regardless, some solution is going to compromised on since NO ONE wants to be part of the government that pushed through the greatest economic meltdown of modern history if the US defaults on its debts.

Regardless of that though, someone is going to figure out a great new product or system in ANY economy to make them money, be it predictable or non-predictable, legit or illegal, fair or unfair. It’s plain human nature.

So Robert is right again. 🙂

Trex
July 13, 2011 at 5:19 pm

I’m an entrepreneur who started two companies one in ’87, and another in ’96, and both are still alive and kicking today. If I were 32 years old would I do it again today? Only if I was really dumb and foolish. The regulatory deck is stacked against small start-ups (thanks to Congress and China), and the meager financing available then is even thinner now. Hell, if I tried some of the stuff we did as R&D in 1989, the Feds would have me locked up doing twenty years.

Michele
July 13, 2011 at 5:37 pm

If quantifiable academic achievement were the measure of potential presidential greatness, none of those we universally admire would have qualified. And an argument could be made as well that practical experience in war, economics, has been irrelevant; great leaders have been quick studies, good listeners to great advisers, but finally (and Truman and Lincoln come to mind here) they inspire by demonstrating grit, resolve, courage and the like. In other words they have character and ethics and the skills for political survival. By this measure, I don’t think that Obama is failing too terribly, but these times do require more. Hope he rises to the occasion. Hope we all do.

huxley
July 13, 2011 at 6:11 pm

The claim on the table that has many of us chafing is that “Obama has always been the smartest man in the room.” I’ve never heard anyone support that claim with facts — it is always presented as something everyone knows because of his charisma or something.

Quantifiable academic achievement would be one indication, but Obama has kept all his records sealed. Intellectual achievement would be another, but even though Obama was president of Harvard Law review and later was a teacher of constitutional law, he has contributed no papers.

He has written two books but those were essentially popularizations of his life and his political thought.

Many people find Obama an inspiring speaker, but what remarkable, original thoughts has he presented in those speeches? Hope and change, healing the planet, the oceans receding? Those are emotional appeals.

I have seen no evidence that Obama is “always the smartest person in the room” or can “play eleven-dimensional chess” or any of the other inflated claims made by people who are infatuated with Obama.

Of course, smartness does not equate to great leadership. But it’s clear that Obama is no great leader either. In 2 1/2 years he has squandered sky-high approval ratings, led his party into one of the most disastrous mid-term elections of our time, polarized the nation even more than Bush, and has failed to make any headway on the economy.

You can blame others for Obama’s failures — Obama does so constantly — but great leaders are great because they overcome obstacles, not because they make good excuses.

I interviewed Nixon in New York after his fall. I interviewed Ford in Rancho Mirage. I worked awhile for Carter and spoke with him several times. I had dinner and drinks with Reagan after he was governor and before he was President. I interviewed Bush in his CIA years and met Clinton twice. I never met W and I haven’t met Obama. My work puts me in touch with a LOT of very smart, very capable people and Lord knows I’m willing to state my opinions. There’s a lot of discord here concerning the ability or lack of ability of our CiC. I feel fairly confident that I have both the ability and the credibility to settle this particular argument. So I’ll try to meet the guy as soon as I can and afterwards I’ll share my thoughts with all of you. Deal?

huxley
July 13, 2011 at 7:02 pm

Robert: Thanks for the gracious reply, but not really.

You made the claim that Obama “has always been the smartest in the room,” without qualification and without evidence. That’s a huge claim, considering the rooms of Columbia, Harvard, Congress, and any number of presidential briefings that Obama has been in.

Why would you make such a claim now? Why should we believe you in the future should you manage to meet with Obama for some minutes?

Whatever Obama’s smartness quotient might be, there is no disputing his ability to impress people, especially those predisposed, with his intelligence. But that’s the appearance, not the substance.

Again what is the actual evidence for Obama’s off-the-chart intelligence?

Tim K
July 13, 2011 at 8:57 pm

I’ll give you and Obama the benefit of the doubt. He’s a smart guy.

He writes a lot of his own speeches. That’s takes something.

I figured it would take another 150 years before an African-American became president. There’s a lot of smart ambitious people who want to be President. He is where he is because he’s got something going on between the ears.

He may not always be the smartest guy in the room, but I like to see the situation where he’s the dumbest. I’d like to be there, but then… oh never mind.

huxley
July 13, 2011 at 11:19 pm

Tim K: I’ll grant that Obama is a smart guy but I see no evidence from anyone here, there or anywhere that Obama is usually the smartest-in-the-room-guy. That brainiac reputation is what I’m objecting to.

Instead I have read people babbling about Obama’s “first-class termperament,” the “crease in his pants” or the “tingle up their leg” or some teacher’s opinion that Obama was “brilliant.”

It’s nice that Obama writes some of his speeches, but frankly those speeches aren’t much to be proud of IMO. I can’t remember any president whose speeches resorted so often to strawman attacks and the golden mean fallacy. It’s also noticeable that he is not that articulate without a teleprompter.

For all his vaunted skill as an orator, his speeches stopped being able to move public opinion in favor of his agenda in the first year of his presidency and he now confesses that he and his administration have not communicated well and that’s their big problem.

Obama has boasted that “I serve as a blank screen on which people of vastly different political stripes project their own views.” I think that’s what Obama’s success is largely based on. Smart liberals project their hopes of a super smart liberal president onto Obama and that’s all there is to it.

Obama is an illustration of Malcolm Gladwell’s “Blink” hypothesis — that based on some set of cues people intuit that Obama is extremely intelligent without going through a rigorous, rational process.

Trex
July 14, 2011 at 6:40 am

“I figured it would take another 150 years before an African-American became president.”

LOL — how white of you to offer that condescending BS. Mr. Obama is about as close to the African American community as fish is to ice cream. The man is an empty bottle, and people fill it with their own biases and hopes. He was voted in by clueless 20-somethings (my daughter was one) and many now regret their obvious mistake.

Charlie
July 13, 2011 at 7:05 pm

Don’t forget that Hewlett Packard was started during the Great Depression.

Tim K
July 13, 2011 at 9:00 pm

I think it’s always interesting to compare the technologies of the 1920s … at the beginning of the great depression, with those at the end. There’s King Kong in black and white grabbing at biplanes. In 1939 the spitfire was in production and Dorothy was singing follow the yellow brick road in color. That’s ten years where it seemed like, in some respects, the universe had changed.

Rich the Mongoose
July 13, 2011 at 7:26 pm

Well said, Bob.

Politicians and government are just either obstacles or tools to achieve the entrepreneur’s objective.

BozoTheClown
July 13, 2011 at 10:26 pm

Barak Mugabe Obama …

JJ
July 14, 2011 at 12:41 am

You comparing Obama to Mugabe? Where do you get that comparison from? The circus?
Last time I heard Obama was not killing and torturing his people. Don’t include Iraq etc as Bush started that.
Obama is not taking peoples livelihoods, farms, businesses etc because of their race, gender etc … or maybe just for his wife
Maybe BozoTheClown you should go back to the circus or go to Zimbabwe as Mugabe has turned it into a circus albeit a very sad one!!

Due to the “ratchet effect” the mature businesses have outgoings (pay, perks, bonus, etc) that can’t be easily reduced and its this that put them at a disadvantage. Starting a business in a depression gives you an advantage, you have to start lean in order to survive.

ealing207
July 14, 2011 at 3:58 am

this whole issue of “smarts” has been a non-starter or me – i marvel at the number of folks who are beguiled (and the number of people who like to do the beguiling) by an ivy degree or association. not that they are not smart but “smart” comes in many different packages. often the elite badge comes with the self-delusion that you actually know what you are doing – because, well you went to Harvard dammit! Robert McNamara anyone? One of my best friends and former colleagues was a kid from the mean streets of the Bronx who barely got past High School, went to an ITT type tech school and sounds like an extra from the set of Goodfellas. He was probably the most brilliant designer of very large scale data & telecom networks – on one particular occasion watching him hold an audience of very senior telecom Engineers (many Phd(s) from MIT and Stanford in the room) as he solved a problem in about 2 hours that had “beguiled” them for about 3 weeks. When i asked him how he did it he said,” I just see it – I dunno” hie’s gone on to be quite successful. His status of being “smart” has come from a history of doing smart things.
The venture process could do with a more sophisticated way of determining “smart”
On that note I would like to ask Mr. Cringely what his opinion is on “Start-up America”? been to a number of the events and so far it seams like a whip cream cake – light, airy but with no nutritional value whatsoever.

huxley
July 14, 2011 at 10:15 am

I work in hi-tech and I’ve met a number of engineers from MIT, Stanford, Yale, Harvard etc. They’ve all been smart and hard-working, but none of them walked on water as far as I was concerned. Their main weakness was a tendency to overestimate their intelligence and abilities, thereby getting their projects into trouble and making it difficult to admit their mistakes.

That’s Obama in a nutshell.

I don’t think Obama’s supporters do Obama or the nation any favors by fawning over Obama with grandiose claims about how super-smart he is.

John Kern
July 15, 2011 at 11:39 am

Didn’t GWB get a MBA from Harvard. And release his grades as well? Does that validate or invalidate many of the arguments being made here?

Edmund Cramp
July 14, 2011 at 5:36 am

I Love It – that’s a good assessment and sure, anyone can nitpick individual points but you’ve stated the problem clearly – Politicians have no understanding of what it means to start and run a business. Even the politicians have have “run” a business have usually been so remote from the actual day to day business that they are, almost by definition, incompetent and out of touch. These are the basic rules:

Every day is a good day to start a business if you have a product that people want.
Nobody hires anyone just because they get a tax break.
Nobody hires anyone just because they have the money in the bank.
Nobody develops anything because they get a tax break.
If you give away money then people will take it.

Finally, if we’re comfortable with the idea that top executives should earn more than 200 times the pay of their workers … how on earth can you make the claim that the executives should be taxed at about the same rate as their workers?

A fair society would tax its citizens according the benefits that they derive for the society – and that means that I, as someone who owns and runs a company should be taxed at a higher rate than the people who work for me. Because, when it comes down to it the resources that taxes pay for – roads, police, the armed forces, clean water, emergency services, corporate jets etc, benefit me far more than they do anyone working for me.

Montgomery
July 14, 2011 at 6:54 am

Because by definition, those top executives are paying 200 times the taxes of their workers to begin with. But the gap in tax liability is even greater than that. Run the numbers.

Take an executive who makes $10 million a year running a company that employs 50,000 workers. It is probably a fair estimate that he will pay $2 million in federal income taxes (this is a conservative estimate; according to Forbes.com the richest 1% – those making $388K or more per year – of Americans paid 23% of their AGI in 2006).

On the other hand, the majority of his employees (assume 90% or 45,000) will make under $50,000 per year, which means that 68% of them (or 30,600) will have no federal income tax liability whatsoever (i.e. will get a refund meeting or exceeding what was withheld from their paychecks throughout the year). Of the remaining under-$50K employees who do have a tax liability, their federal income taxes will easily be $5K or less.

So, that $10 million boss is paying #DIV/0! more than the vast majority of the employees in his company (because they pay no federal income taxes) and at least 400 times more than the lowest paid employees that are required to pay.

That is the most lying piece of nonsense in this thread. People under $50K will have no tax liability. Oh, no more than what was withheld, so they don’t “pay taxes”?

Tim Kane
July 14, 2011 at 7:47 am

Well I think that’s what they call “a straw man”. Its a fictional er hypothetical company with a fictional Ceo and fictional workers, and so on….

So it may be a reflection of a typical company, out of aggregate data, or it maybe simply what he thinks is typical. We don’t know.

So it’s probably not based on a reality. I don’t blame the guy. If he’s lucky he’s got a real job and doesn’t have time to go out and look at real data, and even if he does, it will be one or two situations and we wouldn’t know if that was an exception or the norm.

But it would be valuable information to know and understand. Personally I find $50,000 a bit troubling for a typical worker. When I lived in Korea the same worker typical worker was making $60,000 or more and he got his health insurance at a cost of $45 a month (or at least, I did – well actually more like $42, also his company had to match that). So 50,000 is barely middle class in this country… if he’s got two kids, a wife and a dog, two cars and a house payment and insurance, saving for college, etc…

Montgomery
July 14, 2011 at 8:53 am

And what you’ve done here is called an argumentum ad hominem fallacy. You know nothing about my employment, but you’ve attacked me, I suppose, because you are unable to respond to my arguments.

I am a financial controller (and former long-time accounting manager) for the service company of one of the world’s largest banks. Worldwide we employ more than 250,000 employees. In the US, an average employee in our customer service call centers make ~$30K. These employees account for the majority of our workforce. Of course, there are managers, IT specialists, risk analysts, and other skilled positions that get paid substantially more, but they account for perhaps 10% of our total workforce. So I think that $50K is a reasonable estimate.

Montgomery
July 14, 2011 at 8:32 am

I didn’t say they paid no taxes, I said they had no federal income tax liability. In 2010, 45% of US households did not owe any federal income taxes. This isn’t a secret.

Not to make a punching bag out of myself, but I earned 50k last year, and got money back from federal taxes. (mostly additional child tax credit money).
I want my taxes to be low as much as the next guy, but I think that’s just crazy.
Any program that allows tax liability to get to zero or below is irresponsible.
I really think everybody should pay something.With the upfront withholding, everyone FEELS like they are paying even if they really aren’t in the end.

Montgomery
July 14, 2011 at 8:44 am

Furthermore, with Earned Income Credits (in 2010 as much as $5,666 depending on income level and number of children), it is possible for low income tax payers to get a federal income tax refund in excess of dollars withheld.

BryanJ
July 19, 2011 at 10:59 am

That’s the part that get me the most – the greed on both ends of the spectrum.

I’m not going to even go into all of what many at the top of the banking and investment sector have done to our economy… We all pretty much agree there was some really corrupt crap going on.

However, there are people out there that are getting $5K-$10K in credits annually from the federal gov’t in tax returns. How can the government continue to operate like that and remain solvent?

Both sides are stealing from a system that is in dire need of reform at the top and at the bottom. Someone with REAL leadership and problem-solving skills (like many people hoped Obama had but has come up short on so far) needs to get everyone to realize what needs to change.

No president can do it themselves, but they at least need to sell the people on why it has to be done… And saying, “We need to eat our peas,” isn’t gonna get it done.

One last thing: Can this future (and probably fictional) leader get it done before China (and ultimately India, according to Bob here) take over the economic world for decades or even centuries to come and turn us into a colony of serfs working just to pay off our debt and/or feed raw materials (primarily food) into their economies?

Tim Kane
July 14, 2011 at 7:36 am

Our society is based upon one governing principle: free contract.

In such a society, bargaining power is everything. Everything that goes on around us, from advertisements in the media and on t.v. to personal grooming to what happens in the dens of iniquity in Washington and on Wall Street – it’s all about individuals or groups trying to enhance their bargaining power. What you make, what you earn, is a function of your bargaining power.

CEOs pay isn’t a function of their productivity it’s a function of their bargaining power. Carly Fiorina got paid roughly $30 million to resign from HP after destroying a third of the companies value.

CEOs get paid alot because of their bargaining power. Any money made beyond the initial nominal return on investment (historically 4%) , is called Rents (the term invented by Ricardo). The rents that a company makes is all up for grabs. Who will get how much? Shareholders? Executives? Employees? It all depends upon their bargaining power.

Over in Japan the CEO only gets about 50 times more than an average worker. Pity their lack of bargaining power. In America they get over 400 times the average worker’s bargaining power – pity the workers lack of power or admire the CEOs power?

In our society the bargaining power edge comes down heavily on the side of executives… at the expense of investors. Some blaim this on the “solidarty of the CEOs” because the Board of Directors are supposed to manage the company on behalf of shareholders and their interests, but BoD is typically made up of CEOs from other companies, … so they all wink and award each other big salaries.

Bargaining power. It’s not just for breakfast any more.

YetAnotherBob
September 2, 2011 at 1:16 pm

so, your point comes basically down to the board of directors, who are elected by the stockholders. If you don’t like what they do with the CEO’s (and I agree that it is insane. Most boards are composed of CEO’s from other corporations. It’s an incestuous situation.) Then as a stockholder, you should withhold your vote on the board. Replace them. Support a board member who is more to your liking. The board votes by proxy, meaning that they have influence based on the number of stockholders they represent.

Of course, if you don’t won stock, then you have no say, as you aren’t an owner.

Interesting that the OCD/entrepreneurial gene seems to be clustered in highly predictable zones. If incentives didn’t matter then one would expect for that distribution to be completely random.

Glenn M
July 14, 2011 at 9:03 am

Well, I am glad to see that many people here are drawing lines about entrepreneurship, taxation, our current economic woes, and the federal budget deficit. I hope that Mr. Cringley wouldn’t mind if I go a little farther here and draw a few more lines for people to ponder on.

In a previous post (one that I admittedly did not edit for grammar prior to posting) I essentially said that regressive taxation creates negative pressures that are just as bad if not worse that progressive taxation. What I believe is that any taxation will create burdens, whatever kind of taxation you care to use.

America’s current problem is that it is being forced to come into balance with the world price for everything, due to globalization. The argument for globalization is that it actually reduces world poverty, and provides the widest possible range of opportunity for all humans on the planet. This is true. The argument for Americans is that globalization provides the best pricing for goods and services worldwide. This is also true, but to a point.

While providing the best prices for oranges, computers, cars and t-shirts, globalization cannot directly affect the price of housing. If you live in America, you have to pay the American cost of housing and medicine. If you look up the cost of these two things in America over the last half-century, you will see that they have not obeyed globalization. Instead, they have resisted the forces of technological innovation and entrepreneurship to drive down costs and they have run rampant. This has had disastrous effects on the economy.

Look at housing, for example. In order to increase prosperity in America over the last half-century, we have produced a number of laws and reduced a number of regulations to allow home buying to become easier, over time. This forced prices up, and this was seen as a good thing, not a bad thing.

Imagine if the price of a loaf of $1.47 generic white bread were $2.74, and this was seen as a good thing by all. (US Census Bureau median new home price, 1961- $17,200, 2011- $222, 600. Consumer price index for white bread 1961- $.21. May 2011 – $1.47. That is an almost double the cost of housing compared to bread.) The reason it was seen as good is because the used house was seen as a salable good. An increase in its value was and increase in wealth in the eyes of government and homeowners alike.

However, every wave of increase in the cost of housing increased the the cost of being housed. This put pressures on the costs of labor, and businesses and governments could not bear it. Taxes increased, and businesses began looking for alternate means for obtaining labor. This, ironically, created pressure to break down the barriers for home ownership at the governmental and financial levels, the argument being that new homes create the need for labor to build them and all the furnishings in them.

Over time however, this has not been the case. Those who have gone to home construction sites over the last few decades will have noticed the increase of foreign (mainly Mexican) labor, and the furnishings have almost ceased to be American made. In fact, the money for financing all this purchasing increasingly became foreign as well. (This is because the increase of housing costs (and medical costs) increased so much that Americans cannot afford to work at world labor prices.) We had come to the point where Americans could no longer build houses to create artificial wealth.

The housing bubble-burst of 2007-2008 was where the cost for housing had finally outstripped our ability to pay for it. And when all those people who were stuck in those overpriced houses with those terrible mortgages could no longer refinance, many had no where to turn but bankruptcy. This lead to the catastrophic worldwide financial disaster we are still in the grips of today. Banks failed, tax bases destroyed, businesses wiped out, dreams crushed. You are all familiar with the story.

So what has all this to do with entrepreneurship? A lot actually.

I think we need to look at our failure and make an assessment. Was it really a good idea to artificially raise the cost of housing? How should we see the cost of housing? How should we see the cost of anything, for that matter? What should be our goals? Here is my suggestions.

First, we need to set as our goal to reduce the cost of everything in America to world levels or below over time, including housing and medicine. Wealth is not how much you make, but what you can buy with it. America should be about plenty and affordable, and not artificially so. Governmental policy should judged by that rubric.

Second, we need to reduce the amount of debt owed by both governments and individuals, starting now. Governments need to cut spending and increase taxation on an individual basis. Asking individuals who can barely afford to keep a roof over their head to bear the the full brunt is morally wrong and economically unwise, so the new taxation should be progressive. (I personally like Alan Simpson & Company’s budget plan.) Individuals should have their access to easy credit reduced. Businesses, however, need access to capital, and credit should be carefully increased to them. But we are in perilous debt. We need to get out from under it.

Third, our housing policy should be fixed towards helping people own houses, not mortgages. We should help people get out of bad mortgages, and into affordable housing. We should not develop any more policies designed to increase the cost of housing, or with those who own housing to easy fall into debt.

Fourth, we should heavily encourage entrepreneurship to reach these goals. How do we get affordable housing and medical care? No government program is better than someone with a good idea with the ability to make it come to life. Like Mr. Cringely said, 95% of these ideas fail, but in that 5% exists nearly all our triumphs. Want to truly make something cheaper? Look at what entrepreneurs have done with technology. We need to innovate ourselves out of this mess.

America can come back. I just think we need to, as a good entrepreneur might say, to decide on what we want and work the plan.

Gene King
July 14, 2011 at 10:03 am

I tip my hat to you sir.
Great post!

Trex
July 14, 2011 at 10:38 am

You are tap dancing around the obvious. In 1994 Robert Rubin and Alan Greenspan cut a deal with China, and then President Clinton signed off on it. Basically it gave China access to our markets so as to export normally inflationary activities in U.S. capital markets to Asian markets. A win-win right? The Chinese cleverly used this opening to start buying Congress (anyone recall Clinton’s ’96 reelection campaign — bags of cash, etc.). Within a short period they took over the west coast ports, gained control over both ends of the Panama Canal, and began to strategically decimate U.S. manufacturing.

During Bush’s reign the onslaught continued. China gained MFN and was admitted to the WTO, in exchange for their purchase of Treasury securities. Their decimation of U.S. manufacturing shifted to ever smaller sectors such as tool companies, auto parts, optics, and their friends in Congress enacted new regulations to limit American entrepreneurs that might be future threats.

Under Obama, China is now in control of major, critical sectors of the U.S. economy. From strategic rare earth minerals needed in military systems to plastic tote bins for Grandma, our source is China. All of this is no accident, it is the culmination of a well-executed, multi-decade plan by men far more clever than any of our political and business “elites”.

Glenn M
July 14, 2011 at 12:39 pm

“World Resources: Rare earths are relatively abundant in the Earth’s crust, but discovered minable concentrations are less common than for most other ores. U.S. and world resources are contained primarily in bastnäsite and monazite. Bastnäsite deposits in China and the United States constitute the largest percentage of the world’s rare-earth economic resources, while monazite deposits in Australia, Brazil, China, India, Malaysia, South Africa, Sri Lanka, Thailand, and the United States constitute the second largest segment. Apatite, cheralite, eudialyte, loparite, phosphorites, rare-earth-bearing (ion adsorption) clays, secondary monazite, spent uranium solutions, and xenotime make up most of the remaining resources. Undiscovered resources are thought to be very large relative to expected demand. A very large resource enriched in heavy rare-earth elements is inferred for phosphorites of the Florida Phosphate District.”

Note the last two sentences.

As far as a well-executed, multi-decade plan, I wouldn’t be surprised. What I am calling for is for us to finally make a plan of our own.

Glenn M
July 14, 2011 at 12:51 pm

Sorry, part of my post got deleted. The quote is from the 2011 USGS Mineral’s Rare Earth report.

The US has rare earths, we just don’t mine for them. The reason is that mining is scorned in America. ( I know this full well, living in Kentucky.) Developing new mining entails potential future litigation. Go look up the universities in America where you can learn to be a Mining Engineer, and see how many graduate each year.

As for the US and China, I would agree with you. Clinton and Bush sought to tap into the vast potential market of China, but what they found was a lot of poor people who are willing to work for less than we will. China has wisely used this to infuse itself with capital, and is leveraging that capital to build out into the world economy via acquisitions of resources and businesses. Lenovo is a good example of this. This is just smart moves. We are the ones who are being dumb.

We need to live within our means, quit creating artificial wealth, and innovate.

Charlie
July 30, 2011 at 7:23 pm

Glenn M, thanks. Actually, all who carried this thread for so long deserve thanks from all of us who lurk; I choose not to admire just those opinions with which I agree, but this has been one of the top-notch commentary threads I have read in a long time.

So, ALL of you: THANKS!

But, Glenn M said “We need to live within our means, quit creating artificial wealth, and innovate!” and his previous posts described that ‘artificial wealth’ so succinctly (housing, pharma, labor cost) that I award Glenn M the “Smartest Man in the Room” designation. Sadly, I can’t; it’s Bob’s blog and RxC has already wasted that honor on a politician. Believing as I do that RxC has, really, always been the smartest man in THIS room, I have to apologize to you, Glenn, because your just reward was squandered by RxC – perhaps in a ‘senior moment.’

Seriously, thanks to you all.

Linus
July 17, 2011 at 7:25 pm

China has/will use any means necessary to bring down or weaken an ‘opponent.’ This would be the U.S. Their ‘experts’ documented same as recently as 2008 in declaring this simply as ‘types of warfare.’
They’re smarter than us, so far.
They see most of us as opponents.

Wes Humphrey
July 14, 2011 at 10:47 am

This is a keeper. Thank you for a wonderful perspective.

francis
July 14, 2011 at 1:02 pm

Bob has a point, a really good point – entrepreneurs have to do what they have to do.

Not quite. Necessity. Remember that. Jobs and Edison and Land and … managed to *create* necessity. Beyond food, clothing, shelter, and doctors not much is truly necessary. Remember that, too.

YetAnotherBob
September 2, 2011 at 1:31 pm

minor correction. Food yes, necessity. Clothing, minimum is a necessity, most is not. Shelter, also minimum is a necessity, more is not.

Doctors, though are a luxury, and one controlled moreover by a monopoly, as is the drugs prescribed. that, along with Legal trickery is why health care costs have risen so much faster than other costs. The rest is mostly just advertising propaganda and bad politics.

You don’t really need doctors any more than you need a car. There are alternate means of transportation, and many people live many years without them. There are also many people who live many years without ever seeing a doctor.

Granted, you may believe you live better with both a car and a doctor, but neither is really required for you to live.

I think it’s an over simplification to imply that entrepreneurs are born that way and they simply must fulfill their destiny regardless of conditions in the economy. Some people who might try to start a business in more favorable conditions might think better of it under less favorable conditions. Sure, a few people will try to start a business even in a depression. But so what? Many more people undoubtedly would try it under conditions that are more favorable.

The best conditions would be when banks or VCs are willing to provide startup capital, when there is a sound market economy, when the government doesn’t impose too many restrictions on business firms, when there are means to advertise new products and services, when the general population has spending money, etc., etc.

Starting a business and being an entrepreneur *are not* synonymous. Read my link. Say defined what he meant, and no one (other than the usual Knuckleheads) has changed the definition. Anyone can “start a business”; that’s just being a Capitalist. Neither Smith nor Say put them on a pedestal. VCs are the closest thing we have today to entrepreneurs, really. Though most who toss off the term don’t know that.

Your definition of a “knucklehead” or a “right wing-nut” being anyone who doesn’t agree with your apparently left wing beliefs? How satisfying it must be to possess the ultimate truth about everything.

If you would bother to research the Internet, you would discover there are many definitions of what it means to be an entrepreneur. And almost all of them involve starting a business.

Again, you get the last word, Robert.

Barry
July 14, 2011 at 2:59 pm

Why is taxes the one area where it is politically correct to be a bigot? The vast mojority of people are eager to go after “the rich” or “the top 1%” after all since this is a small group of people and will always be a minority it is safe to try to harm them for your own benefit. Why should those foul people who worked hard or got lucky and make more than you be allowed to keep it? Of course they should just gladly give up more of their money. Not just pay more taxes because they made more but raise the rates on them. Heck lets go for the 100% tax rate. They don’t need the money and it is evil to let them keep what they make. Or do you like hurting the poor?

Life is not fair. Some people are stronger, smarter, better looking, have more money etc. Unless you want to make wealth illegal and mandate that everyone will get a fixed amount from the government and all other income is banned you will not make it “fair”.

When Obama says we all have to tighten our belt is he saying raise ALL taxes 2% or remove credits/deductions so every american shares the pain? No only a small group is supposed to bear the burden for everyone and we will call that sharing the pain. Let’s take Obama at his word and cut the government benefits to everyone. Then we would all share the pain equally and since the government can only guarantee the spending not what it will take in in income cutting spending is the only way to ensure that the government does not spend more than it takes it.

John Kern
July 15, 2011 at 12:31 pm

We then should take this opportunity to institute a “flat tax”, and the associated elimination of deductions, including the sacred (but insidious) home mortgage interest deduction. The conspicuously wealthy would then pay more, but couldn’t claim unfairness.

Tim Kane
August 2, 2011 at 1:09 pm

There’s an old saying, “behind every great fortune, lies a great crime.”

John D. worked hard to build Standard Oil, but some of is his actions were criminal. Tons of wealthy Americans of merit at the turn of the last century, made their fortune as opium brokers in China following The Opium Wars. The most notable was one of FDR’s grandfathers. I believe the Mellon fortune got it’s start in Opium brokering in China too. Of course, it wasn’t a technical crime. Just a moral crime. Like Bill Gates shoving DOS and Windows 3.0 down our throats, the later cutting us off from OS/2 – the lost hours of productivity due to PC machine’s crashing during the middle of a document creation would probably exceed the GNP of some small countries – but it made, that clean cut, hard working, earnest boy, Bill Gates, rich. So why shouldn’t we tax the rich? That’s better than sending them to jail, which in most cases, they probably deserve. In the case of Bill, I wouldn’t send him to jail, just have him pick up trash on weekends along side freeways in an orange jump suit would suffice.

Engineer
July 16, 2011 at 5:07 am

Every problem facing america today was CREATED by Government.

Obama just spent the entirety of his term taking over banks and car companies– against the law– nationalising health insurance–against the law– and spending many trillions of dollars the government doesn’t have.

Now when all this damage comes home to roost, he talks about “Shared sacrifice”… which really means, the private sector pays for the public sector largesse.

Bush was no better. He started (and obama needlessly continued) mutliple wars that cost way too much money ,and spent like crazy, growing an out of control police-state appratus (which obama needlessly has continued).

No matter how much entrepreneurs grow the economy, increase efficiency, boost productivity, raise the standard of living… government grows to take up all of these benefits, and spends still, even more.

Government is a disease, masquerading as its own cure.

When it makes the host sick, it talks about how the host needs to sacrifice to keep the disease working.

Reduce the size of the government– drastically– and I really don’t care what parts you cut. Fight it out, cut all the things I love, I don’t care.

Reduce the size of the federal government by %50, reduce federal spending by %50, and keep taxes where they are and start paying down the debt.

Within a year, you’ll have a booming economy in this country. It isn’t government spending that keeps the economy going, it is the cost of government spending that is drowning the economy.

Cut down the government, and americans will be more free, and much more prosperous.

Don’t do this, and you have no right to complain. And there’s no way in hell I’m going to sacrifice myself because you can’t control yourself.

Ronc
July 16, 2011 at 1:48 pm

“Government is a disease, masquerading as its own cure.”
“And there’s no way in hell I’m going to sacrifice myself because you can’t control yourself.”

Thanks. Just thought it deserved repeating.

Tim Kane
August 2, 2011 at 1:31 pm

So that means you are an anarchist?

All government is evil?

Where’s your example of the virtuous society?

The prime example of the governmentless society is Somalia. How’s that country doin’ these days?

On the other hand, you have well governed Canada who is making it’s way through the Great Recession considerably better than us.

On behalf of Government,our government, let me say this: it split the atom, it won a two front global war, during that war it built two cross country oil pipelines in less than four years, it built, in short order hundreds of thousands of barrels of capacity for the production of aviation grade fuel in only four years with never a shortage at the front, it created virtual floating supply depot islands in the middle of the pacific, it put a man on the moon, it built the interstate highway system on a continental scale, virtually overnight.

Yeah, that government is evil.

In South Korea, where I lived for four years, there’s no question, none, that government policy MADE the rapid prosperity they enjoy today. They will tell you, in 1960 their per capita GNP was $100. (The expression for ‘good morning’ there today is still ‘did you have a breakfast’ because many did not – and spam is still viewed as a luxury gift item at holidays) Today its roughly $30,000 (depending upon the curreny comparison methodology used). EVERYONE knows that that great industrialization was a function of GOVERNMENT industrial policy – patterned closely on the one Japan had employed just before them. When there is a problem they look to the government to solve it. (part of the reason for this is that in their social/educational system, the highest academic performing elites, the most prestigious, go into government or teach as Professors).

The alternative to government doing something is corporations. Government is, at least, supposed to act in your best interest, and you have some limited control. Do you really think Corporations are in it for your best interests?

Corporations hate government, because they want control. The ideology of shrunken or no government, then is one of Corporate control – a society lead and controled by CEOs.

They want control, at your expense, to maximize their interests. By the way, the system of government controlled by corporations is called Fascism.

You might want to rethink that government = evil thesis over again.

If you don’t like what the government does, then advocate for changes. But if you worked in systems, especially complex ones, you know, if you change something an inch here, it can cause a change of a mile somewhere else. Public policy planners then have to deal with issues engineering systems that are as complicated as any engineering system you can think of. If you can’t wrap your head around a problem, that doesn’t mean it’s evil. It’s just not in your forte.

deanston
July 16, 2011 at 2:30 pm

All these mental masturbation is just a distraction to avoid the real question nobody dares to ask – how to grow this thing called the ‘economy’, maintaining the trend of the rich getting richer (as it has been for the past 30 years) while raising everyone’s living standard across the globe with an ever growing global population and ever dwindling resources?

In Leave It To Beaver days we only needed 1 job per household. Today we need 2+ full-time jobs to barely cover the bills in a rental with no savings. Jobs don’t matter if the jobs don’t pay. The homeless aren’t worried about Al Qaeda. Half of our productive generation and dedicated workforce are wasting their lives in endless oversees wars with no ROI. Half the crap we buy and sell end up in the garbage or garage or storage is just more trash for the future.

“Science and engineering will find a solution” – I can just see the readers of this blog respond. I hope so. I hope your children are smarter than we all. Somethings and some people will have to sacrifice, even if you get rid of all government and have nothing but corporations run the world. Nobody in this room is willing to say whom.

BAZZ
July 31, 2011 at 6:25 am

“In Leave It To Beaver days we only needed 1 job per household”

Those were the days before feminism and women’s desire for equality*. The business response to feminism was to have the two genders fight to the bottom of the wage scales while demanding and getting 100X to 10000X CEO salaries. The middle class has stagnated in wages for 30 years!
After 9/11 Bush told everyone to buy (but did not increase wages) so everyone bought on credit even Uncle Sam going from 1Trillion in hock to more than 9 Trillion while not increasing the taxes on the rich**. The middle classes have born the pain post 2008, while Wall street has got approx 1Trillion for their efforts in f^#king the economy!
And you Americans cannot see the Republicans ruin USA ( Reagan Bush41 Bush43 all lived on credit and do not want to tax the rich). A Nobel Economy prize was given to a person in 2001/3 for showing tax saves countries from turning to oligarchies like Saudi Arabia! Find the prize economist and save USA!
Otherwise join the hasbeen states of Babylon Rome and Royalist France.
USA is living beyond its means and no one will help if you collapse – they will divide the spoils!

* I’ve said elsewhere that females have the future in their hands but only see equality.

** That’s a trillion a year each year during Bush43 and nobody cared!

YetAnotherBob
September 2, 2011 at 1:42 pm

In ‘Leave it to Beaver’ days, the average house size was 1500 SF. Today the average house size is 2800 SF. With twice the house, and twice the number of cars, it should be no surprise that buying it all takes twice the work.

The dream is that we have twice the productivity, but we don’t really. We do have twice the debt, though.

Most of the country does not do productive work. Farmers do, as do miners, refiners foresters and manufacturers. that is less than 25% of our work force. The rest do other jobs. Most office workers, and ALL of government do overhead jobs. They tell themselves that it’s important, but the truth is that for most, lawyers, clerical staff, ‘middle management’, and the ‘visionary’ C** executives, they are just a drain on the society. (* above is a place holder for any capolital letter such as E, O, I, F and so forth.) Both the lowest and the highest paid people in America today are not making things better for the rest of us.

Paul Johnson
July 18, 2011 at 4:19 pm

How many members of Congress ever tried to start a business (without benefit of connections or family money)? How many were engineers or even doctors in private practice? Now compare with how many have law or finance degrees. The President typifies the problem with BOTH parties, he is representative of today’s career politician.

Thank you for some other great post. The place else may anyone get that type of info in such an ideal approach of writing? I have a presentation next week, and I’m at the search for such information.

BAZZ
July 31, 2011 at 6:56 am

My favorite statistic for WWII is GDP increase for UK Germany CCCP and Japan — all in the 3-4 times level. Guess what USA’s was?

Today USA has no oil no entrepreneurs that make USA work.
Katrina’s National Guard response was slow — all the men and vehicles were in Afghanistan and Iraq! AND ARE STILL in Afghanistan and Iraq AND ARE NOT BEING REPLACED TO SAVE AMERICANS in AMERICA — GO FIGURE*.
The first Gold shock in the 70’s was in response to the excess dollars with no home, after 35 years of good times.
Today’s 15Trillion debt will make USA the world’s white trash!

* Its how Bush43 ran the war: Pallets of Dollars for Iraq and Afghanistan and nothing for the citizen solder or citizen! And privatize government agencies to cronies, to transfer the wealth from the commonwealth to robber barons. How USA has changed since 1880s.

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I now realise I have been wrong. I shouldn’t single out Murdoch, but conjure these images for entrepreneurs in general; people with no social conscience whose

YetAnotherBob
September 2, 2011 at 1:48 pm

I know it’s off topic, but Bob, I see a lot of entries on your site, especially the older posts like the ‘beats by dr dre studio” above that are really just spam. You should clean it out once in a while.

I forget where I read it, but CEOs are 10 times more likely to be bi-polar than the rest of the population. I believe there are certain traits that make exceptional people exceptional, but also different as well. (which is why the average person would like to classify it as different).